The Week’s Hottest ETFs

Each week, I like to publish the past week’s hottest ETFs to share some new trends and niche ETFs out there and give investors some new ideas. For this week, B2B Internet continued to be hot, energy ETFs continued their streak, and various metals ETFs were strong. But, rounding out the top of the list are:

BHH (BHH) - Up 15% B2B Internet Holders - This internet ETF is actually up over 60% vs. a marginal gain for the S&P500 (^GSPC) YTD. In prior downturns, we saw tech get hammered, but surprisingly, this time around, tech had no direct role in the market euphoria and these companies seemed to have learned a thing or two about living without excessive costs and holding cash. Tech may very well continue to outperform if we’re looking at a slow recovery in financials and housing.

JJT (JJT)- Up 11% - Barclays iPath Tin - This one’s actually an ETN which carries ETN-specific risks to consider that ETFs don’t - like counterparty risk, and usually a much lower trading volume which leads to higher spreads, but as far as I’ve seen, it’s the only pure play on Tin, which rallied significantly last week - again. JJT is now up 50% YTD.

UCO (UCO) - Up 11% - ProShares Ultra DJ-UBS Crude Oil - Oil continued its rally last week and this ETF seeks to return twice the daily performance of the Dow Jones AIG Crude Oil Sub-Index. A nice theme when considering a possible return to triple digit oil again this summer is to learn how to hedge fuel prices as a retail consumer/investor: airlines, transports and other businesses do it, why shouldn’t we?

ERX (ERX) - Up 8% - Direxion Daily Energy Bull 3X - This ETF seeks to return 300% of the daily performance of the Russell 1000 Energy Index. This ETF is a routine placement on the weekly list. As long as the trend continues upward, outsized returns will outpace the spot price of oil. However, note that with these daily resetting ETFs as noted above, volatility eats into returns if the trend breaks as outlined here in this explanation of the degradation of value on both sides of the 3X ETF Long/Short play. In other words, if you hang on to these too long, you can lose money on either side of the fence, regardless of what happens to the underlying index.

Disclosure: No positions in the specific ETFs covered. However, Long Jan 40 USO Call, which is a bullish play on oil (1X no leverage).

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